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March 01, 2024

BIR misses collection target in Q1 despite 7.2% increase

The Bureau of Internal Revenue (BIR) missed its collection target by 8.9 percent or P47.2 billion in the first quarter of the year as businesses availed of the provision allowing outright crediting of their input value-added tax on capital goods under the Tax Reform for Acceleration and Inclusion (TRAIN) Law.

The agency said in a report to Finance Secretary Carlos Dominguez III that its collections increased by 7.2 percent to P485.4 billion from January to March this year compared to P452.9 billion in the same period last year.

The actual tax take was lower than the P532.6 billion target set by the Development Budget Coordination Committee (DBCC).

BIR Deputy Commissioner Arnel Guballa attributed the shortfall to businesses deciding to fully utilize their input VAT credits on purchases available to them under Section 35 of the TRAIN Law.

Prior to January 1, 2022, the Tax Code requires that input VAT from purchased capital goods with an aggregate acquisition cost of P1 million pesos and above, must be spread out over a period of 60 months beginning the month of purchase.

With the outright crediting of input VAT by businesses, the BIR incurred a shortfall of P17.4 billion in VAT collections and another P9.4 billion in income tax collections for the first quarter of 2022 alone as compared to the DBCC-set targets.

On the other hand, the bureau’s collections from its non-BIR operations from January to March 2022 reached P18.1 billion, bringing its total collection for this period to P503.5 billion.

The total collection is higher by P33 billion or seven percent from last year’s actual first-quarter collection of P470.5 billion, but lower by P48.3 billion or 8.8 percent from the DBCC target of P551.78 billion for this period.

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